The industry has been divided on the Green Supporting Factor. For that reason, we have spent many hours in discussing with experts from different areas of banks the necessary adjustments to the Green Supporting Factor that will address the criticism, mainly its lack of risk sensitiveness, distorting the link between risk and capital and resulting financial stability concerns as well as its objectivity. Indeed, not everything what is green is less risky.
As a result of that, we are proposing a Sustainable Finance Supporting Factor as an interim measure. Pending the development of the methodologies for the incorporation of the ESG factors into supervisory framework, we suggest that EBA explores the possibility of introducing a supporting factor for certain assets that are classified as sustainable under the EU taxonomy and at the same time show a lower financial risk because of their sustainability profile.